The City of Hillsdale has delayed the demolition of a condemned building downtown, as a county court prepares to hold a foreclosure hearing.
The structure at 23 and 25 N. Broad St. still stands, even though the city’s office of code enforcement considers it a threat to public safety.
The city ordered the owner, Mortgage Management LLC, to repair or demolish the building by Jan. 23. Now, the Hillsdale County Circuit Court will decide whether to foreclose the property because of unpaid taxes on Feb. 28. City officials indicated that Hillsdale County will likely take ownership of the building.
Jeff Fazekas co-owns Mortgage Management LLC. The county foreclosure notice also listed James Daniels and Carol A. Daniels as having a recorded interest in the property.
Tim Dixon of Dixon and Rahe Attorneys at Law is the owner of 27 N. Broad Street, which stands adjacent to Mortgage Management LLC’s property.
He claimed the disrepair of his neighbor’s building caused damage to his building.
“I had to pay to get my own foundation reinforced,” Dixon said, adding that it cost him about $3,800.
Mortgage Management LLC stopped paying taxes in 2009. After three years of delinquent taxes, the county can foreclose on a property and resell it, according to Dixon. Instead, Beth Sanford, deputy bookkeeper at the Hillsdale County Treasurer’s Office, said the county granted the owners a hardship, meaning the county temporarily waived their tax bill.
Mortgage Management LLC owes more than $50,000 in back taxes, according to Planning and Zoning Administrator Alan Beeker, who works for the Hillsdale Office of Code Enforcement.
“It should’ve been handled six years ago,” Dixon said. “If they had foreclosed it and sold it to someone who would’ve taken care of it, then it wouldn’t have gotten so bad.”
A large crack runs down the southwest corner of the building. The city tried to reinforce it a few years ago, but Dixon said it has only gotten worse. Hillsdale Code Enforcement put a barrier around the building to protect people from the crumbling structure.
Fazekas said the building is in disrepair, but does not pose a threat to the public.
“There are things that need to be done, but because of the city harassment and basically not allowing me to have use of the building, I haven’t been in the building in two years, and we haven’t done anything, because we can’t do anything,” he said.
Beeker said his office enforces city ordinances about blight and deterioration. He said they contact Fazekas frequently because his building doesn’t meet city codes.
“It’s not harassment, because he’s not obeying the law,” Beeker said. “It would be like saying the police were harassing somebody for speeding.”
Fazekas said the Tax Increment Finance Authority, the city’s economic development agency, has tried to acquire the property.
TIFA selectively subsidizes business owners, providing them with grants to restore dilapidated buildings that are liabilities — that is, the cost to repair them or tear them down is higher than the value of the property. Since properties in which liabilities exceed value simply deteriorate, the TIFA Board grants money to business owners who present development plans that meet its economic goals.
Fazekas said rather than working with him, the TIFA board wanted to take his property and sell it.
He said he didn’t know why the TIFA board wouldn’t work with him. He added that the City of Hillsdale never contacted him about TIFA until after it condemned his property.
Mary Wolfram, the city’s former director of economic development, said she spoke with Fazekas after the city condemned the property.
“I told him, ‘If you’re willing to donate the building to TIFA, they would accept it,’” Wolfram said.
Fazekas said the city inspected the building without his permission in February 2015.
“TIFA board members talked about acquiring the building,” Fazekas said. “TIFA okayed, on Jan. 20, 2015, for Beeker to look at the building. They sent Beeker out in February to go through the building and fabricate that the building is going to collapse and the whole block is at risk of falling down.”
Fazekas said he didn’t know how Beeker and the inspector got into the building, since he did not give them permission.
“Since they ‘did an inspection’ and condemned the building without informing me, and they didn’t have a search warrant, the Fourth Amendment was violated in this particular situation,” Fazekas said.
Beeker said Rick Roth, a real estate agent in Hillsdale, had the keys and let him into the property. Roth corroborated the statement.
But Fazekas questioned how Roth obtained the keys, since he wasn’t his realtor.
Fazekas said he had the property listed with Don Helton, owner of Don Helton Realty in Hillsdale.
“I most likely called Don Helton and got the keys from him to show it to my buyer,” Roth said. “That would be common practice.”
Beeker, however, said he inspected the building with Roth and an architect from Adrian.
Roth said he went into the building to show it to a prospective buyer, not for an inspection.
“I had an inquiry on it, and a customer was interested in seeing it,” he said. “I’m not sure why Alan came along. I don’t recall why he did, but, yes, he was along when the client and I looked at it.”
Roth said the inspection was visual, and that’s “not out of the ordinary.”
“I don’t recall any pictures being taken. There was no measuring, that type of thing,” Roth said. “I do know that they detected quite a bit of wall movement.”
If the architect did inspect the building, Fazekas said there was a conflict of interest anyway. He said Siler Associates Inc., a long-time employer of Beeker, conducted the inspection.
Wolfram recalled a different story about the inspection.
“It was an outside inspection,” she said. “He had not given the city permission to go inside the building, so it was an outside inspection.”
Although the inspection occurred in February 2015, Fazekas said the architect did not email the city until May 2015. Once the architect informed the city about the building’s condition, it took officials until Dec. 17, 2015, to condemn the property.
“It’s in such disrepair that the whole block is going to fall that it took them until Dec. 17 to condemn the building?” Fazekas said.
The city’s statement said the building “is likely to partially or completely collapse, or some portion of the foundation or underpinning of the building or structure is likely to fail or give way.”
Roth noted that during the walkthrough, the city posted a warning for Dixon, the owner of the next door building, asking him to ensure that his building’s walls were not shifting.
On Dec. 18, the day after the city condemned the building, Fazekas said he received the previously mentioned call from Wolfram.
“She stated that they want me to give them the building and that it would be a great tax write-off for me,” Fazekas said. “They weren’t wanting to purchase it for what I had it listed for previously, but they were more interested in me giving it to them.”
Fazekas said he asked Wolfram whether she would work with Mortgage Management LLC to get the company TIFA grants, to which she responded that she would not.
“His characterization is that no one would work with him,” Wolfram said. “The city’s understanding of itself is that they have bent over backwards trying to get him to work with us, to get him to fix up his own building, and to no avail.”
The city condemned the building in December 2015, eight months after finding a major threat to public safety. Fazekas said he then began to hire attorneys and structural engineers to build a case against the city.
“I met with the first structural engineer in March 2016, at which point he told me they’re full of [it],” he said. “The building isn’t going to collapse. The structure is sound. It isn’t sinking. The city was saying the soil underneath the building is sinking, thus causing the wall to collapse, and that is not the case.”
Since the city hasn’t had access to the building, it has had trouble determining the extent of the structural issues and how serious the threat is to public safety, Beeker said.
“There are definitely bricks falling off this building,” Wolfram said. “There’s a slant to the sidewalk, and the water is running into the building.”
Although TIFA offered to take the building in 2015, disrepair has become so severe that the city is no longer interested. Fazekas tried to give the deed to the city in December 2017, but it didn’t accept it.
“The city will not take it, because he has 10 years of back taxes on the property, and it’s also mortgaged,” Beeker said. “Unless the bank is willing to sign over the property, the city is not going to take on the property and all the debt, as well.”
Since the city won’t take the building and Mortgage Management LLC has no interest in it, the foreclosure hearing will likely result in Hillsdale County taking possession of the property.
“The county’s never going to receive the back taxes,” Dixon said.
Beeker said the county will hold a foreclosure auction for the building in which the minimum bid will be the lien — the amount of back taxes owed on the property. If the building doesn’t sell, then a second auction will occur in which the minimum bid is $25.
But Dixon and Beeker agree: No one will buy the property.
“Who’s gonna spend $50,000 on the tax sale, when they have to spend $1 million to repair the building?” Dixon asked.
It’s also unlikely that someone will demolish the building and rebuild it.
“If they built that building and replaced it so that it was historically correct, it would cost about $1.5 million, by my calculations,” Dixon said.
Beeker said the city hasn’t simply let the property sit as a public safety threat; it has done everything it can to get Fazekas to repair or demolish the property.
“Due process dictates there are certain things you have to do before taking each next step,” he said. “The owner is given a certain amount of time to make amends, and then the next judgement is delivered.”
Fazekas said he doesn’t plan to show up to the Feb. 28 hearing. He’s ready for the county to take the building.
“I’m screwed,” he said. “I lost $200,000, and I’ve lost 10 years of my time, energy, and effort making improvements. I deal with the city on a regular basis. This is the game. The bottom line is: I’m done with it.”